As India’s exports plummeted to $8.4 billion in April to June 2023 period, the much touted success of India’s textile and apparel exports seems to unraveling rapidly. Even though the Minister for Textiles highlighting uplifting information on large-scale textile parks, robust upstream and downstream developments and expansions across the country, the current situation on the ground is anything but upbeat. The media is full of features on mills closing, jobs losses, exports declining yet at the same time, there are news about India holding 4 per cent stake in worldwide trade of textiles and apparel. Indeed, it has been predicted that India's textile and apparel sector will expand at 10 per cent a year from 2019-20 to 2025-26, taking the industry's value to $190 billion. However, this needs a reality check.

Ukrainian conflict brought about woeful financial crisis

Textiles, a key Indian manufacturing sector is in the financial doldrums for many external reasons and the situation has forced representatives of the Confederation of Indian Textile Industry (CITI) to engage with the Indian Banks Association to not only support the industry but also extend one-year moratorium for repayment of the principal amount. 

The reasons are a plenty for the current dire situation. The Union government has levied 11 per cent import duty on cotton and CITI has been lobbying constantly for its removal but so far it has not met with any decision. CITI has also urged the Tamil Nadu government to restrict maximum charges for electricity demand to 20 per cent or the recorded demand, whichever is higher, for HT textile industrial units, as the situation within this state is perhaps one of the worst. CITI also stated the un-ending Ukrainian conflict is a big reason as it continues to affect important markets of the US and the EU and economic uncertainties worldwide slowing down global demand, rising inflation shooting up operating costs and of course the supply chain of man-made fibers is seriously disrupted. Textile exports in June 2023 were worth $1,624 million compared to $1,736 million in June 2022 while apparel exports were worth $1,248 million as opposed to $1,501 million last year.

Operating on 5 to 10 per cent losses

T Rajkumar, Chairman of CITI  highlighted just how bad things in a recent interview. He said the industry that was used to working on 3 to 6 per cent profit margin is bleeding with current losses being between 5 and 10 per cent. India’s textile and apparel industry saw an 11.3 per cent reduction in exports in June 2023 compared to the previous year while several mills continue to face acute cash loss, and many mills in Tamil Nadu in particular, suspended production citing lack of demand. 

Immediate relief need of hour

CITI is proactive in pushing all the buttons including removal of the 11 per cent duty on importing cotton and state governments capping electricity bills. The Indian Banks Association has been urged to provide stimulus for ease of borrowing for members of this currently cash-strapped industry, apart from the extra year extension on moratorium of repayment. CITI is also keen for the government to finalise the textile and apparel export part of the Free Trade Agreement with the UK, where current import levies are between 9 and 11 per cent. 

Although industry pundits claim better times ahead from the third or fourth quarter of 2023, CITI does not want to relax its demands based on projections alone and wants quick government intervention, which so far has happened.